A Smokin’ Place

How Vermont Smoke & Cure grew from a small smokehouse to a smoking powerhouse

Written By

Caroline Abels

Written on

June 01 , 2012

The previous home of Vermont Smoke & Cure was at the end of the Exit 6 ramp off I-89, at the bottom of a long hill, at the first stoplight on the corner, inside the back of a gas station.

“Don’t laugh,” the company’s website said. “Remember that other Vermont food company that started out in a gas station (hint: the ice cream guys).”

But now, just as Ben & Jerry’s eventually did, Vermont Smoke & Cure has grown out of its original gas station headquarters. The smokehouse recently moved from South Barre into a bigger facility—a much bigger facility—to better accommodate the region’s insatiable and mounting demand for…bacon.

Well, there’s also demand for locally produced ham and summer sausage and pepperoni and other kinds of meats crafted by Vermont Smoke & Cure—so much so that the business is anticipated to grow 30 to 40 percent a year for the foreseeable future, as it has for the past few years.

It’s been a long road, going from being a small smokehouse that created comfort food for the now-shuttered Farmers’ Diner to occupying 21,000 square feet in the former Saputo cheese factory in Hinesburg. Walking into the new building, one is struck by the 30-foot-high ceilings, whitewashed walls, brand-new lighting, and freshly painted floors, as well as the excitement of the 15 employees who no longer have to work in the cramped South Barre space.

The move—and the business’s expansion—has been overseen by Chris Bailey, a business school graduate who in 2005 was hired by the founder of the Farmers’ Diner, Todd Murphy, to help with marketing and finance. The diner, located in Barre at the time, closed soon after Chris arrived, and the smokehouse it had been running in the old Rollins smokehouse behind the Shell station was spun out and made a separate business, to be overseen by Chris.

“It was way too revolutionary an idea then,” Chris says of the Farmers’ Diner, which opened in 1999, just before the local food movement took off. “[Todd] was able to prove that people were interested in the food, that he could buy the food, and that you could make the cost of goods work, but it was a struggling mom-and-pop.” A handful of people who were involved with the business back then say that location and management issues led to the demise of the chain, which also opened—and then closed—locations in Quechee and Middlebury.

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As a standalone business, and even when it was part of the Farmers’ Diner, Vermont Smoke & Cure did a lot of smoking for local farmers who needed a place to get their pork bellies turned into bacon. It still does USDA-inspected processing of ham and bacon for small-scale farmers, but today that’s only 2 percent of the business, in terms of revenue. The main focus is on buying meat from farms, processing it from scratch, and selling it under the Vermont Smoke & Cure label.

Contrary to what consumers may assume, given the name of the business, only 6 percent of the meat bought by Vermont Smoke & Cure is from Vermont animals. The meat for its “natural” line comes from a Certified Humane farm in Quebec and from Coleman Natural, a Colorado company that buys from farms across the country. Other U.S. and Canadian suppliers provide meat for the “traditional” line. Smoke & Cure puts the phrase “Vermont grown” on the products made with Vermont meat. The other products say “Made from meat grown in the U.S. and Canada.”

This will change, however, this summer, when all the Vermont-raised meat will be sold under the label “5 Knives.” It’s a product name designed to “tell the story” of the five professions that contribute to the production of local smoked meat in Vermont: the farmer, the grain grower, the butcher, the smoker, and the chef or home consumer. Smoke & Cure hopes the label will help their Vermont-raised product stand out in stores.

“It’s a great way to encapsulate everything that’s involved—another way to say that it takes a community to raise bacon,” Chris says. After the 5 Knives launch, the familiar Vermont Smoke & Cure label will only be used on non-Vermont meat.

Right now the “first knife”—the farmer—is Greg Finch of Franklin, who raises all the pork for the company’s Vermont-grown ham, sausages, and uncured bacon. Greg’s farm is pasture based, and the grain for the pigs comes from a farmer down the road (the “second knife”). The pigs are then processed at Vermont Livestock in Ferrisburg (the “third knife”). The partnership works because Black River Produce, a Springfield-based food distribution company, buys Greg’s pigs jointly with Smoke & Cure and the two companies split the various parts according to what each one needs.

“It’s a heritage breed, on a single farm, the farmer has total control, the grain is grown locally from non-GMO seed, and the pigs are out on pasture, so it’s much better than anything we’re able to buy out of Canada,” Chris says.

He adds that he’d like to purchase more Vermont-raised pork but the quantities aren’t there yet, and the kinks are still being worked out in the current partnership. However, in recent years, retail demand for Smoke & Cure’s “natural” line of products has far surpassed demand for its “traditional” products.

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Chris has had a peripatetic life working for numerous small-scale food ventures and farms in the Northeast. More settled now than ever, he is widely credited with making Smoke & Cure what it is today. “This has been a long time coming and he’s been very patient,” says Janice St. Onge, who runs one of the financing sources for Smoke & Cure’s expansion (see below). “He’s one of those people who can execute.”

He’s also, in addition to being the CEO, one of 20 owners of the smokehouse, some of whom were early investors in the Farmers’ Diner. He calls them “a patient money group,” as the return on their investment will not be as rapid as it might be with other ventures.

And just as the diner was unique for its time, Vermont Smoke & Cure is pretty unique in Vermont today. It’s one of only two USDA-inspected smokehouses in the state that do private-label work for farmers, allowing them to sell their products out of state. Smoke & Cure also sells gluten-free meat snacks. Called RealSticks, they’re made not only with Quebec pork but also beef from Pineland Farms, a Maine-based purchaser of Northeast and Mid-Atlantic beef.

In early May, Chris noted on the company’s Facebook page that after a long day of moving equipment into the new facility, he and other employees celebrated with some gumbo at a Hinesburg restaurant. He thanked the restaurant in a post and wrote, “Let’s talk andouille someday soon.” At this rate, it wouldn’t be surprising if andouille sausage from Smoke & Cure was on that restaurant’s menu sooner rather than later.

Flexing Muscle

Among the handful of entities helping to finance Vermont Smoke & Cure’s move into a giant former cheese factory in Hinesburg is a small, emerging financial tool launched by the Vermont Sustainable Jobs Fund (VSJF) to support businesses in the food, forestry, renewable energy, waste management, and environmental technology sectors.

Called the VSJF Flexible Capital Fund L3C, it offers financing that falls somewhere between a loan and an equity investment. With equity investments, an investor purchases a piece of ownership in a business and gets a significant return relatively rapidly; with a traditional loan, a business must provide adequate collateral. Yet small, growing Vermont food companies often don’t have sufficient collateral to secure a loan or the ability to create a large, quick return that would attract an equity investor.

The “Flex Fund,” as it is known, solves this by making “equity-like” loans without an ownership requirement. These higher risk loans don’t require collateral and are often repaid through a revenue share (or royalty) payment over a longer period of time than an investor or lender might usually require. The tactic is akin to the “Slow Money” approach becoming increasingly popular with investors who prefer supporting a meaningful project over making a quick buck.

“If a company’s revenues drop significantly for whatever reason, with a royalty loan they’re not locked into a set monthly principle and interest payment,” says Janice St. Onge, president of the Flex Fund. “If their revenues go down, they pay less, if they go up, they pay more.”

Flex Fund loans, capitalized by accredited investors and foundations, and “flexible” in their terms, are designed to be complementary with other types of financing. That was the case with Vermont Smoke & Cure, which also secured funding from government agencies, lenders, banks, and mission investors. The company received the first loan issued by the Flex Fund.

“Smoke & Cure was a great example of a number of different kinds of funders coming together to provide the right mix of capital and support for this business to stay and grow in Vermont,” St. Onge says.

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